Laurence Dollimore
THE International Monetary Fund (IMF) has revised its outlook for the Spanish economy after seeing an unexpected spike in domestic spending.
The expert body believes Spain’s economy will now grow 2.4% in 2024, thanks to a boost in family spending sparked by salary increases and a reduction on the inflation rate.
In a report, the IMF also said the country has enjoyed more business investment thanks to ‘the flexibility of financial conditions’ and the unrolling of the ‘Recovery Plan.’
Previously, Spain was expected to see a 1.9% growth this year. In 2025, current forecasts predict a 2.1% boost.
It comes after the Government of Spain posted a projected economic growth of 2% for 2024.
It said there had been a record creation of jobs – and of higher quality – while the ever important tourism industry was proving stronger than ever.
“The Spanish economy has demonstrated outstanding resilience in an uncertain global context and despite the tightening of financial conditions [due to the ECB’s interest rate increases],” said the IMF in a statement published on Wednesday.
“The labor market has maintained its strength, due to important migratory flows,” the IMF added in its report.
However it pointed out that it still has a very high unemployment rate, while private investment remains low.
“Despite its most recent rebound, investment is still below 2019 levels, and this weakness has contributed to low productivity growth,” the report said.
Regarding inflation, the IMF predicts that it ‘will decline further throughout 2024-25, approaching the ECB’s 2% target before mid-2025.’
Threats to inflation coming down ‘include a possible rebound in global energy prices and faster-than-expected increases in labor costs.’
